Economic Value Added (EVA)
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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Ford Motor Co. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Analysis of Debt
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Economic Profit
Ford Motor Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT showed a significant turnaround from 2020 to 2021, shifting from a large negative value of -428 million USD to a strong positive result of 11,380 million USD. After this peak, NOPAT declined sharply to 2,786 million USD in 2022 but showed gradual improvement in subsequent years, reaching 3,005 million USD in 2023 and rising further to 6,733 million USD by the end of 2024. This indicates an initial recovery followed by volatility, with signs of improving operational profitability towards the latest period.
- Cost of Capital
- The cost of capital increased from 6.37% in 2020 to a high of 8.27% in 2021. It subsequently decreased slightly to 7.91% in 2022 and remained relatively stable around 8.03% in 2023 before falling to 6.92% in 2024. This suggests a fluctuating but overall downward trend in capital costs after peaking in 2021, which may impact investment evaluation and financing costs.
- Invested Capital
- Invested capital exhibited a general upward trend over the five-year period. Starting at 170,559 million USD in 2020, it dropped marginally to 160,105 million USD in 2021 but then increased steadily each year to 164,218 million USD in 2022, 173,985 million USD in 2023, and ultimately 186,730 million USD in 2024. This steady growth in invested capital indicates ongoing investment and expansion efforts.
- Economic Profit
- Economic profit remained negative throughout the period, with notable fluctuations. It was deeply negative at -11,299 million USD in 2020 and improved significantly in 2021 to -1,856 million USD. However, it deteriorated again to -10,201 million USD in 2022 and worsened further to -10,968 million USD in 2023. Improvement was evident in 2024 with a reduced loss of -6,184 million USD. This pattern reflects ongoing challenges in generating returns above the cost of capital, despite some periods of mitigation in losses.
Net Operating Profit after Taxes (NOPAT)
Ford Motor Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for doubtful receivables.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Ford Motor Company.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense on Company debt excluding Ford Credit = Adjusted interest expense on Company debt excluding Ford Credit × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss) attributable to Ford Motor Company.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss) Attributable to Ford Motor Company
- There is significant volatility in the net income figures over the five-year span. The company experienced a substantial loss of $1,279 million at the end of 2020, followed by a remarkable recovery yielding a profit of $17,937 million in 2021. However, this was not sustained as a loss of $1,981 million was recorded again in 2022. The subsequent years show a positive trend with profits of $4,347 million in 2023 and $5,879 million in 2024, indicating improving profitability.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrors the patterns observed in net income but with less pronounced fluctuations. The figure was negative at -$428 million in 2020 but then increased sharply to $11,380 million in 2021. It declined substantially to $2,786 million in 2022 but then remained relatively steady with a slight increase to $3,005 million in 2023. In 2024, NOPAT shows a significant rise to $6,733 million, suggesting improved operational efficiency and profitability.
- Overall Trends and Insights
- The company's financial performance exhibits considerable cyclicality and recovery efforts throughout the reviewed period. After an initial loss in 2020, both profitability metrics surged in 2021 but could not be sustained into 2022. The recovery from 2022 onwards is steady, with both net income and NOPAT demonstrating growth, indicating improving operational results and successful management initiatives to increase profitability. By 2024, the positive momentum appears to strengthen, reflecting a more stable and profitable position.
Cash Operating Taxes
Ford Motor Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Provision for (benefit from) income taxes
- The provision for income taxes demonstrates significant volatility across the analyzed periods. In 2020, the provision was positive at 160 million US dollars, indicating tax expenses. This shifted dramatically in 2021 and 2022, where the company recorded negative provisions of -130 million and -864 million US dollars, respectively, suggesting benefits or tax credits during these years. Although still negative in 2023 at -362 million US dollars, the magnitude of the benefit decreased. In 2024, a notable reversal occurred, with the provision turning positive again to 1339 million US dollars, indicating substantial tax expenses compared to prior years.
- Cash operating taxes
- Cash operating taxes also varied markedly over the five-year horizon. The value was positive at 680 million US dollars in 2020, before plunging to a negative figure of -862 million in 2021, implying a cash inflow or tax refunds. In 2022, there was a significant increase to 2693 million US dollars, representing a sharp rise in cash outflows for taxes. This declined in subsequent years to 1245 million in 2023 and further to 918 million US dollars in 2024, indicating a reduction but remaining substantial compared to 2020 levels.
- Overall insight
- The tax-related figures exhibit considerable fluctuations, with periods of tax benefits transitioning into years of considerable tax expenses. The sharp negative provisions and negative cash operating taxes in 2021 suggest one-off tax credits or adjustments which were not sustained. The substantial increase in 2024's provision for income taxes corresponds with a more moderate cash tax payment relative to the peak in 2022. This pattern reflects a volatile tax environment or changing profitability and tax strategy within the company, which may warrant further investigation to understand the underlying causes.
Invested Capital
Ford Motor Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to equity attributable to Ford Motor Company.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The financial data over the five-year period reveals several notable trends in the company's financial structure, specifically concerning its debt, equity, and invested capital.
- Total Reported Debt & Leases
- This metric decreased significantly from 162,998 million USD in 2020 to 139,485 million USD in 2021, indicating a notable reduction in debt and lease obligations. However, from 2021 onward, the debt level began rising again, reaching 160,862 million USD in 2024. This upward trend suggests increased borrowing or lease commitments over the last three years after the initial reduction.
- Equity Attributable to Ford Motor Company
- Equity experienced strong growth from 30,690 million USD in 2020 to 48,519 million USD in 2021, reflecting an improvement in the company's net asset base. However, equity declined slightly in the subsequent years, dropping to 43,242 million USD in 2022 and further to 42,773 million USD in 2023, before a modest recovery to 44,835 million USD in 2024. This fluctuation could indicate variable profitability, retained earnings impact, or other equity adjustments during the period.
- Invested Capital
- The invested capital showed a downward movement from 170,559 million USD in 2020 to 160,105 million USD in 2021, followed by a steady increase in subsequent years to reach 186,730 million USD in 2024. This rising trend from 2021 onward suggests continued investment in the company's operations, assets, or growth initiatives that may contribute to future revenue generation.
Overall, the data depicts a company that initially reduced its debt and invested capital while increasing equity in 2021 but then transitioned into a phase of expanding debt and invested capital with relatively stable but fluctuating equity levels through 2024. The increase in invested capital alongside rising debt could imply strategic investments financed partly by debt. The equity trends warrant further investigation to understand the factors affecting net asset value changes.
Cost of Capital
Ford Motor Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Ford Motor Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trends
- The economic profit shows a fluctuating but overall negative trend over the five-year period. Initially, there was a severe loss in 2020, which improved significantly in 2021. However, this improvement was not sustained, as economic profit declined sharply again in 2022 and 2023 before improving once more in 2024. Despite this variability, the company consistently recorded negative economic profit, indicating ongoing challenges in generating value beyond its cost of capital.
- Invested Capital Trends
- The invested capital demonstrates a generally increasing trend throughout the period. After a slight decline from 2020 to 2021, the invested capital steadily increased year over year from 2021 through 2024. This upward movement suggests continued investments and growth in the company’s asset base, reflecting expansion or reinvestment strategies.
- Economic Spread Ratio Trends
- The economic spread ratio, which measures the return on invested capital relative to its cost, remains negative throughout the period. It improved markedly in 2021 compared to 2020, indicating a reduced loss relative to invested capital. However, it worsened again in 2022 and 2023 before partially recovering in 2024. The persistently negative spread signifies that the company has struggled to earn returns exceeding its capital costs, although the reduction in negativity in recent years points to some operational or structural improvements.
- Overall Insights
- While invested capital increased consistently in recent years, the company has not translated this into positive economic profit or a positive economic spread ratio. The fluctuations in economic profit and spread suggest volatility in operational efficiency or external factors impacting profitability. The partial improvements in 2021 and 2024 indicate some progress, but continued negative results highlight the need for sustained strategic focus on improving returns to justify the invested capital.
Economic Profit Margin
Ford Motor Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Company revenues excluding Ford Credit | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted company revenues excluding Ford Credit | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted company revenues excluding Ford Credit
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- The adjusted company revenues excluding Ford Credit have shown a consistent upward trend over the five-year period. Revenues increased from $116,379 million in 2020 to $173,381 million in 2024, indicating significant top-line growth. This represents a substantial expansion in the company's revenue base, with particularly notable increases in 2022 and 2023.
- Economic Profit Analysis
- The economic profit values fluctuate substantially throughout the period, but all reported values remain negative. In 2020, economic profit was -$11,299 million, improved significantly to -$1,856 million in 2021, but then deteriorated again to -$10,201 million in 2022. It remained nearly at the same low level in 2023 (-$10,968 million) before improving again to -$6,184 million in 2024. This pattern indicates persistent challenges in generating positive economic profit despite revenue growth, with some notable recovery towards the end of the period.
- Economic Profit Margin Trends
- The economic profit margin, expressed as a percentage, corresponds with the economic profit trends and remains consistently negative throughout the period. It improved from -9.71% in 2020 to -1.47% in 2021, showing a relative reduction in losses. However, it declined again in the subsequent years to -6.83% in 2022 and -6.6% in 2023 before improving to -3.57% in 2024. Overall, while the margin remains negative, the fluctuations suggest periods of relative operational improvement and setbacks within the analyzed timeframe.
- Overall Insights
- Despite strong and steady revenue growth, economic profitability remains a significant concern, with persistent negative economic profit and margins. The company experienced a brief improvement in economic profit in 2021 but has struggled to maintain this positive momentum. The improvement in 2024 suggests some recovery efforts may be yielding results, but the economic profit margin still indicates the operation is not generating surplus economic value. Continued focus on cost management, efficiency, or strategic initiatives may be necessary to translate revenue gains into sustainable economic profit.